Reg. 105 withholding can apply to cancellation fees

Reg.105 provides for withholding on payments to a non-resident "in respect of services rendered in Canada."  Although the analysis is lanky, CRA appears to consider that Reg. 105 withholding would apply where a U.S. artist is paid a cancellation fee after having rehearsed, but not performed, in Canada, unless a Treaty-based waiver is obtained.  This is unsurprising, as CRA has found that up-front withholding is required even on deposits (2011-0405561E5 – see also Ogden).

Neal Armstrong.  Summary of 12 February 2014 T.I. 2013-0505511E5 under Reg. 105(1).